Electricity supply rates to rise about 14 percent

Most home and small-business electric customers in southern and central Maine will see the cost of their power supply go up roughly 14 percent on Jan. 1, after the Maine Public Utilities Commission on Monday approved a new standard offer rates for 2019. Rates will rise from 7.9 cents per kilowatt hour to 9 cents.

Medium-class businesses will see a 7.8 percent increase.

The new rates affect the majority of customers served by Central Maine Power who don’t choose to buy their electricity from a competitive supplier. Instead, the PUC selects a provider following a bidding process.

The new rates are only for the energy-supply portion of electricity bills, not the distribution services provided by CMP. Under Maine’s 19-year-old electric restructuring law, utilities only distribute power. They don’t generate and sell it.

Total home electric bills for CMP customers currently average about $88 per month, a combination of the supply and distribution charges. Under the new rates, that total will rise to roughly $94, or 6.7 percent.

The rise in electric supply rates in CMP’s service area reflects a regional trend.

Wholesale electricity prices in New England have been rising of late, driven in part by the cost of natural gas. Roughly half the region’s power comes from gas-fired plants, which typically set the price for wholesale electricity in New England’s competitive marketplace. So if natural gas prices go up, wholesale power prices tend to follow.

In October, for instance, average wholesale gas prices rose 20 percent and average electric prices went up 24 percent, according to the region’s grid operator, ISO New England. These real-time, monthly averages help form the basis for the retail rates home and business customers ultimately pay in long-term contracts, such as the one approved Monday at the PUC.

Earlier this week, the PUC chose a standard-offer supply contract for eastern and northern Maine that will lead to roughly 16 percent increase next year in the cost of electricity for home and small business customers served by Emera Maine.

For the typical customer who lives in the Emera Maine service area, bills will jump nearly $6 a month.

Last June, the New Hampshire PUC approved a 19 percent hike in the energy charge for Eversource, the state’s largest utility. The per-kilowatt-hour rate went from 7.9 cents to 9.4 cents.

In October, customers served by National Grid in Rhode Island saw their standard offer rates go up from roughly 8.5 cents to 10.9 cents per kilowatt hour. That’s the highest rate there since 2015.

FACTORS AFFECTING PRICE

A handful of factors appear to be behind these rate hikes across the region.

“New England is heading into its second consecutive winter season of unusually high electricity prices,” National Grid said in a statement at the time. “Much of this increase is due to the announcement of several older generation plants going offline. While new resources are stepping up to meet future demand, most utilities and their customers across the region are still feeling the impact.”

Another contributor is the growing role of renewable generators on the grid, according to Marc Brown, a spokesman for the New England Ratepayers Association. Brown said state policies that favor intermittent resources such as wind and solar have created more risk for the companies that bid into supply contracts, especially for home and small-business customers. It’s important for New England to continue building power plants that can dispatched when needed, he said, especially in the winter.

“I think we need to revisit how we look at capacity in the region,” Brown said.

The shortage of natural gas on the coldest days of the year is a factor because demand for the fuel is growing, but opposition to building new pipeline capacity in the region has triggered tight supplies and high prices.

“The price increases are driven by increases in wholesale energy market prices in New England which, in turn, are driven by constraints on the availability of natural gas,” said Mark Vannoy, PUC chairman, last week after the Emera Maine rates were announced. “The region needs to address New England’s natural gas infrastructure needs.”

The rate hikes are felt broadly because the majority of CMP customer default to the standard offer.

In recent years, competitive suppliers have had a hard time beating the PUC-selected rates for home and small business customers. Also, media reports around deceptive marketing practices involving the state’s largest private supplier, Electricity Maine, have dampened interest. Electricity Maine, currently is offering a two-year fixed rate of 10.29 cents/kwh. Another supplier, C.N.Brown, is bundling a nickel-per-gallon savings on heating oil with a rate of 8.96/kwh for 11 months.